U.S. Jewelry, Watch Sales Slow in August
Plus, what economists are saying about consumer spending and a possible recession.
Sales in the category in August were up 4 percent year-over-year, according to preliminary data from the U.S. Bureau of Economic Analysis (BEA).
Jewelry sales alone increased 4 percent year-over-year while watch sales also rose up 4 percent.
In July, sales in the watch and jewelry category rose 6 percent year-over-year, as per revised BEA data, with jewelry sales increasing 6 percent and watch sales up 7 percent.
Watch and jewelry sales for the full year are expected to continue to grow but will likely not match the level reached last year.
In 2021, dubbed “the year of jewelry” by industry analyst Edahn Golan, sales in the category reached an estimated $106.01 billion, a 46 percent increase year-over-year, according to revised BEA data.
This year, as of September, full-year watch and jewelry sales are expected to reach an estimated $112.34 billion, a 6 percent year-over-year increase.
Jewelry and watch sales and the overall economy are on a similar trajectory of slowing growth as consumers battle inflation amid geopolitical unrest.
The Consumer Price Index, which measures the average change in prices over time consumers will pay for a basket of goods and services, rose 8 percent year-over-year in August and 0.1 percent month-over-month.
The rising cost of shelter and food offset the effect of falling gas prices, according to data from the Bureau of Labor Statistics.
In a statement about September’s CPI, President Joe Biden said: “It will take more time and resolve to bring inflation down, which is why we passed the Inflation Reduction Act to lower the cost of healthcare, prescription drugs and energy.”
In the National Retail Federation’s October review, Chief Economist Jack Kleinhenz gave an overview of the current economic situation, highlighting the headwinds and weighing the possibility of a recession.
“The economic situation in the United States is unsettling,” said Kleinhenz. “Consumer confidence is down, consumer spending’s rate of growth has slowed, and economists and consumers alike are worried about the possibility of a recession, all reflecting persistently high inflation and rising interest rates.”
While the spending growth rate has slowed, there is still growth.
Consumer spending was better than expected in August with the U.S. Census Bureau reporting overall retail sales growth of 0.3 percent month-over-month and 9 percent year-over-year.
“Year-over-year increases in retail sales have been mostly in the upper single digits since spring, not as dramatic as the double-digit numbers seen most of last year into early 2022 but still healthy,” he said.
The battle against inflation is a tricky one. Higher prices impact consumer confidence, but the Federal Reserve’s main tool in fighting inflation is raising the interest rate, which is another blow to consumer confidence.
“Consumers have become cautious – but they have not stopped spending,” Kleinhenz said. “Growth is not as high as last year, but households continue to spend each month as more jobs, wage growth and savings backstop their finances and help them confront higher prices.”
As for a recession, the possibility is seeming more likely, he said. Gross domestic product has declined for two consecutive quarters, which does typically, though not by the official definition, indicate a recession.
The Blue Chip Economic Indicators panel of business economists, which includes Kleinhenz, does predict GDP growth ahead in the third and fourth quarters of the year.
However, in a September survey, fewer economists on the panel believe the Federal Reserve can rein in inflation without causing a recession (38 percent this month versus 51 percent in August), but 95 percent believe a recession would likely be mild.
Around 42 percent of the panel said they expect a recession this year while 54 percent said it would begin in 2023.
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